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Israel and Australia are involved in a spat over the death of a young man held in an Israeli prison. It is a cloak-and-dagger tale. Ben Zygier, who is said to have hanged himself in 2010 after being detained in conditions of great secrecy, held dual citizenship. Media reports in the two countries suggest the former Mossad employee had threatened to reveal details of the way Israeli intelligence agents carry other nations’ passports on overseas operations.

The abuse of foreign documents is a cause of some anger among Israel’s allies. The British and Australian governments lodged protests when their passports were used by Mossad operatives who travelled to Dubai, three years ago, to kill a leading figure in the Palestinian Hamas movement. Perhaps it is a coincidence, but the operation took place in the same year Zygier was arrested. The fear is that such identity theft puts at risk innocent citizens of the third country.

The squall will probably pass, not least because there seem to be sensitive questions about how much was known by Australian spooks. Behind this story, however, lies a more important one. It is about how the sorry state of Israeli-Australian relations reflects a wider trend. Benjamin Netanyahu’s government has been losing Israel the support of its best friends. This is something that should worry anyone concerned with Israel’s long-term security.

When the UN General Assembly debated Palestinian statehood towards the end of last year, the starting point among politicians in Canberra was an assumption that Australia would do what it has always done — it would “vote with Israel” by opposing Palestinian recognition.

Julia Gillard, the Australian Prime Minister, proposed just such a course when the issue cropped up in the Australian cabinet. She was persuaded otherwise. A majority of her ministers did not want to lend support to Netanyahu. Ignoring pressure from Barack Obama’s US administration, Australia abstained when it came to the UN vote.

By the account of one of those at the cabinet discussion, the decision marked a big and, for Israel, dangerous shift. A nation once seen in Australia as a beleaguered friend — a vibrant democracy in a sea of Arab autocracies — was now viewed as its own worst enemy. As this minister explained it, Israel was once defined in Australian minds by the idealism of its kibbutzim. Now its public image was shaped by a bellicose Netanyahu and colonisation of Palestinian land by Israeli colonists.

At this point, some readers may say: Who cares? Australia is scarcely a big player in the Middle East. Why should Israel fret over the stance of a middle-ranking country sitting a couple of continents away? That might be true were Australia an exception. Sad to say, it is closer to the rule. Israel is losing legitimacy among allies around the world. Netanyahu bears the responsibility.

Australia was far from alone at the UN. Of the 27 EU members, only one — the Czech Republic — paid heed to frantic Israeli lobbying. The other 26 abstained or voted with the Palestinians. The abstentions included Germany, which, for obvious reasons, finds it terrifically hard to step away from Israel. German officials explained that Chancellor Angela Merkel had lost all trust in Netanyahu.

Britain seriously considered lining up with France and the majority of EU governments in voting for the Palestinian resolution. It settled eventually for abstention. Within the “Anglosphere”, only Canada joined the US in voting against affording Palestine the status of a non-member UN state.

For reasons that are not obvious, Netanyahu blamed Obama for the wholesale desertion of Israel’s friends. The president, he complained, had “failed to deliver the Europeans” — as if somehow the US could have instructed Merkel, France’s Francois Hollande or Britain’s David Cameron to toe the line. What this curious reasoning obscured was the sea change in public and political perceptions in countries that could once be relied upon to support Israel.

Netanyahu seems to take pride in defying Obama and others by continuing to expand illegal colonies in the West Bank. When the Israeli and US leaders went head to head on the issue, Obama blinked. It has been Israel, however, that has suffered the consequences.

In the description of one European foreign minister — a long-standing friend of Israel — colony expansion makes a mockery of Netanyahu’s stated willingness to accept a Palestinian state. His eagerness for a military strike against Iran reinforces the prevailing perception of a leader more interested in war than peace. Faced with widely drawn international parallels between the West Bank and the Bantustans of apartheid South Africa, senior figures in Netanyahu’s Likud party have begun to admit the danger. “We could pay a great price,” Dan Meridor, the Deputy Prime Minister, said recently.

For good reasons of history, Israelis believe they must be ready to stand alone in a hostile neighbourhood. However, past leaders such as Ehud Olmert have observed that security cannot be defined simply by a capacity to secure victories on the battlefield. In a world so interconnected and interdependent, Israel cannot afford to lose international legitimacy that flows from a readiness to make peace.

There are myriad obstacles to an agreement with the Palestinians — many of them on the Palestinian side. However, Netanyahu has redefined the issue in international opinion as one essentially of Israeli intransigence. That is a serious concern because it actually matters what people in Australia think.

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